“Kentucky sues to reclaim gamblers’ losses online”

by Walter Olson on April 11, 2010

“In a new move against the online gambling industry, Gov. Steve Beshear’s administration is attempting to use an obscure state law to recover losses incurred by Kentuckians who placed bets through Web sites.” Three times the losses, in fact. [Stephanie Steitzer, Louisville Courier-Journal]

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Kentucky Sues For Gamblers’ Losses : Conservative Compendium
04.12.10 at 12:51 pm

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1 A.W. 04.12.10 at 12:36 pm

well, i could see a defensible version of these facts. there are several state laws that say that gambling is illegal and to really hit it where it hurts, they say that any time you lose in fact you don’t owe them at all. never mind that you might wake up with no kneecaps, but as a matter of law in those states, you can sue to get the money you lost back.

My guess is KY did the same thing, but added treble damages, which from a public policy view makes a certain sense. i guess if you don’t have a problem with gambling this bothers you, but i do, so it doesn’t. Gambling is basically pissing money away in the hopes (which is rarely backed up by science) that you can beat the house.

Further internet gambling has to be the dumbest form of gambling around. So what is this, you pay money to a website, and then a computer game runs and it tells you whether you won or lost. and how do you know it is at all fair?

It reminds me of a bit on Newsradio once. Andy Dick’s character was crazy about gambling, and the technician didn’t want to gamble any more. i think his name was joe. The exchange in paraphrase was something close to this.

Andy: C’mon, one more bet. $50 on anything.
Joe: Okay, i am thinking of a number between 1 and 10.
Andy: Okay, 8! (holds out the money)
Joe (takes the money): So close! 7.

The joke being that whatever Andy said, Joe would say something different and take the money. It wasn’t an honest contest. So explain to me how internet gambling is different.

But, but, but… i won at internet gambling once. yeah, you probably did the first or second time you went there. Of course you won’t always lose. they aren’t that dumb. but you will lose more often than you win, and chances are they are deciding exactly when you win and when you lose, balancing out the risk and reward just right to make you keep hitting that button like a rat in an experiment. its a scam and i shed no tears at the thought of the KY AG taking it down.

2 Brian G. 04.12.10 at 12:50 pm

Why is your opinion of gambling relevant? If you thought posting blog posts was a waste of time, would you suppose the government outlawing that, too?

This lawsuit is ridiculous, and the article does a good job of outlining its problems. For one, the sites being sued are poker sites, and poker sites don’t “win” bets, because poker players don’t play against the house.

3 Todd Rogers 04.12.10 at 1:01 pm

A.W. – Would you feel the same way if subject matter was something other than gambling? I’m not sure that this story is about gambling so much as it is about a state attempting to exert its sovereignty beyond our shores (or its own borders) for the sole benefit of its treasury.

4 gitarcarver 04.12.10 at 1:24 pm

its a scam and i shed no tears at the thought of the KY AG taking it down.

According to the article, the law is that when gambling illegally, the loser may sue the winner for treble damages.

The poker site is not the winner – the players are. Can you imagine the uproar over a lawsuit when the state of Kentucky is suing it’s own residents for money that does not go back to the loser, but now goes to the state?

The state is suing the site because that is where they can make an argument that the big bad site that made millions off of people playing should have to cover for the people that played an lost. Its not the law, but that doesn’t seem to matter. Go after the deep pockets.

I am not a fan of internet gambling simply because of some of the problems that AW cites. Is there someone sitting at the HQ of a site who is able to see all of the player’s cards? Obviously that would be a huge advantage for the company and it has happened before.

The solution would be akin to having a company submit their programming code to the state gaming commission much like slot machines do, but that can’t happen because the companies are outside of the US.

If people want to play online that is certainly their business, but I would prefer that the government be allowed to verify that the company’s coding a security procedures do not allow someone inside or outside of the site hack the game.

5 A.W. 04.12.10 at 3:43 pm

Brian

> Why is your opinion of gambling relevant? If you thought posting blog posts was a waste of time, would you suppose the government outlawing that, too?

There is a slight difference. Blogging is speech and rightfully protected by the federal constitution. Gambling is not.

> For one, the sites being sued are poker sites, and poker sites don’t “win” bets, because poker players don’t play against the house.

Well, if that is factually true, that is problematic. But even then, promotion of gambling is a crime. And further, you never know what the courts might have said on the subject.

But as a matter of policy? Zero objections.

And for that matter, that assumes that for instance none of the people in the round actually work for the house. Perhaps when we hear the government’s side of things we will learn that is the case.

Of course the laws should be followed, but if the law has been understood for like 100 years to be read that way, tough on this site.

Todd

> Would you feel the same way if subject matter was something other than gambling? I’m not sure that this story is about gambling so much as it is about a state attempting to exert its sovereignty beyond our shores (or its own borders) for the sole benefit of its treasury.

Well, the fact is if you commit a wrong that has an effect in a state, the state should be able to come after you. I mean consider this scenario. Imagine a person writes to you claiming to be a Nigerian prince and if you only sent him $500, he will send you $5 Billion. Now imagine some fool actually believes it and sends the money. Now of course it is difficult to even get your hands on the Nigerians doing this, but if it could solve problems of extradition, etc., shouldn’t a state be able to get at them.

If a state wants to ban gambling, its kind of hard to accomplish that if it can’t ban internet gambling, too. and contrary to suggestions in the article, such an organization doesn’t have to shut down entirely. They just have to learn where it is illegal and stay out of those jurisdictions. That can be done. I know because my own company has dealt with similar issues.

Gitar

> Can you imagine the uproar over a lawsuit when the state of Kentucky is suing it’s own residents for money that does not go back to the loser, but now goes to the state?

well, the loser had a chance to sue. and after this, many losers might be interested in suing. i am myself tempted to move to KY, lose in gambling, and then make a tidy profit suing them. Hey, what do you know? you CAN beat the house.

I will add this to your and my analysis, though. I am convinced that pretty much all casinos are crooked, online or off. but at least the offline casinos have to bribe local officials to get away with it. ;-)

6 A.W. 04.12.10 at 3:55 pm

btw, i find it odd that you hear over and over that this is an “obscure law.” i googled kentucky gambling laws and this popped right up.

http://www.gambling-law-us.com/State-Laws/Kentucky/

now of course this all begs the question how this can be kosher given that the Kentucky Derby happens there every year. but then i have never been to one, so maybe there are subtleties i am missing.

7 Dirk D 04.12.10 at 4:53 pm

A.W.

KRS 372.040 is not obscure because it is hard to find on google, it is obscure because no case involving it has been decided in the last 50 years. In fact, Kentucky courts have only seen this cause of action 10 times, ever.

8 David Schwartz 04.14.10 at 6:47 pm

There is simply no way Kentucky can declare void transactions that did not take place inside its borders. KRS 372.040 can only apply to transactions to which KRS 372.010 applies.

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